IN SECOND COMMITTEE PANEL DISCUSSION, TOP ECONOMIST CALLS FOR MORE SENSIBLE, MODEST, HUMANE APPROACH TO GLOBALIZATION

Fifty-eighth General Assembly

Second Committee

Panel Discussion on “Globalization”

IN SECOND COMMITTEE PANEL DISCUSSION, TOP ECONOMIST CALLS FOR MORE SENSIBLE,

MODEST, HUMANE APPROACH TO GLOBALIZATION

The international community must discard the fevered sales pitch of the 1990s and adopt a more sensible, modest and humane approach if globalization were to succeed, an internationally renowned economist told the Second Committee (Economic and Financial) this morning during a panel discussion of that topic.

“Basing everything on the hope of miracles has turned out to be politically, as well as economically, disastrous”, said Paul Krugman, a professor at Princeton University’s School of Public and International Affairs.  He was one of four economists on a panel chaired by Iftekhar Chowdhury (Bangladesh), Chairman of the Second Committee.  The others were Jagdish Bhagwati, Arthur Lehman Professor of Economics at Columbia University; Manuel Orozco, Project Director of Central America for the Inter-American Dialogue; and Jean Pierre Ouedraogo of Ligue des Consommateurs du Burkina Faso.

Mr. Krugman said that, although spectacular success had been seen in the Asian “tiger” economies, globalization and liberalization had failed to benefit many Latin American countries.  But that did not make liberalization a mistake, since inward-looking development had reached a dead end and countries needed to open up.  However, globalization could only succeed if it were linked with policies to help the poor, boost employment, and develop new sectors for trade.

Pointing to the spectacular rate of development in the Republic of Korea and rapid growth in China, he said progress depended on export-led growth based on globalization and trade.  The negative side of globalization had begun with the 1994 financial crisis in Mexico, followed by those of Asia and Argentina in 2001, which had been huge setbacks.  The key was to separate trade from the opening of capital markets, keeping market capitalization apart from the essential trade strategy.

Supporting that view, Mr. Bhagwati said that economists and policy makers were wrong to link trade liberalization with financial crises, emphasizing that trade and export orientation produced real benefits.  However, trade liberalization must be balanced with social advances.  Governments and non-governmental organizations must work to ensure that external deficits, income disparities and workers wages were properly addressed.

At the Doha and Cancun trade rounds, he said, developed countries had been willing to make some concessions, including meagre agricultural concessions, but larger social implications had been inadequately addressed.  Similarly, social democrats had argued that economic globalization lacked a human face and that global economic integration was threatening development rather than furthering it.

Also addressing trade and globalization, Mr. Ouedraogo underscored the urgent need to tackle agricultural subsidies, failing which any progress that developing countries had achieved would disappear.  The West African countries of Burkina Faso, Benin, Mali and Chad had reaped huge benefits from cotton, increasing their production by 60 per cent in the 1990s, and contributing 3.6 per cent to world cotton production.  Their cotton prices ranked among the world’s lowest, at only a third of those in developed countries like the United States.

Cotton made up more than 6 per cent of gross domestic product in West African countries, he said, adding that the crop supported more that 10 million people, boosted rural development, and financed health, education and village infrastructure.  Its disappearance as an export would have disastrous effects and, in order to counter that, governments and non-governmental organizations from both Northern and Southern countries had presented a document at Cancun to eliminate cotton subsidies over a three-year period and compensate countries that had suffered from them.

The Committee also heard Mr. Orozco and Sarbuland Khan, Director of the Office for Economic and Social Council Support and Coordination in the Department of Economic and Social Affairs.

When the Second Committee meets again at 3 p.m. today, it is expected to conclude its consideration of Palestinian and Syrian sovereignty over their natural resources in the occupied territories, and to take up globalization and interdependence.

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